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March 6, 2006TPM Convergence
My friend Rob Hand has a theory about trade promotion convergence – that the current wide disparity in trade promotion practice between the CPG/food sector and durables is narrowing and that they will become more alike. For the most part I agree with him, though I might quibble about the word “convergence” – since it implies that the two are both changing, and will meet somewhere in the middle. The reality is that the convergence is rather one-sided – durables practices are becoming more like CPG, but CPG is changing very little. (Though it is possible that Sarbanes-Oxley might force CPG to adopt at least rudimentary documentation requirements, which would be one (very significant) way in which CPG would become more like durables). Still, some categories seem unlikely to change at all, and the factor that seems to be the driver in determining how and in which ways categories structure and change their programs is, as always, the channels. I don’t think that financial services (e.g., insurance) will ever have trade promotion practices much like CPG, since their channel is independent agents. Nor will highly-technical products that are sold via consultative sales and through channels such as systems integrators. These categories might adopt (or adapt) some practices from other areas. For example, we’ve begun seeing forms of MDF and infrastructure programs in insurance, and technology programs are very big on plan-based programs. But CPG programs are the way they are because they deal with huge channel partners, and durables programs are becoming similar because increasingly they deal with the same retailers. As long as car insurance, as an example, is primarily sold through a multitude of local independent agents, the programs serving those agents will remain at least somewhat similar to “traditional” co-op. This came to mind because I was speaking with someone from the insurance business the other day, who questioned why I generally use the term TPM, or trade promotion management, or trade promotion marketing, rather than co-op. It struck me that one of the ways we can tell how far a given industry is along the pathway from traditional co-op to the CPG/food model is what word they use to describe their practices. The most traditional categories still use some version of “co-op”; others, who are somewhere in the transition stage, use a variety of terms – MDF, co-op/MDF, channel funding, and others. TPM and its variants, though, is used in CPG/food and seems to have become the default term, just as the CPG model has become the default program type. Mike Kantor to head TPMA The Trade Promotion Management Association announced today that Mike Kantor has been appointed as Executive Director, replacing Deb Kuhns, who resigned a few weeks ago. Replacing Deb is a tough job, but I’ve had the pleasure of knowing Mike for several years, and working with him, and I’m confident TPMA has made a good choice. For more news and commentary on a daily basis, visit our blog, TPMtoday. Among the topics in the past few days: Iowa sues rebate fulfillment firm Kroger reverses Wal-mart strategy DoJ investigating music industry |
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©2006 HoukTPM E-mail: info@houktpm.com |